Although there are now some quite notable rises in Far East log prices, West African log prices have remained firm but largely unchanged over the past three months – a continuation of the long period of stability since some modest and specific price rises early in the year.
The competing meranti and keruing logs have risen by around US$20-25m3 in the past month, but with no immediate effect on the West African prices. Of course, market destinations have changed in the past few years and with Europe having become a very much reduced log import market, the prices of Far East logs now have much more influence on the cost of sawn and processed lumber rather than on world log markets.
Over the same time frame, West African logs have made inroads into the Far East as substantial suppliers to China, in addition to serving the traditional European log buyers in the Netherlands, France, Spain, Portugal and Germany – all of which now import much lower volumes of logs than in the past.
For African exporters the good news is that from June 8 Indonesia has permanently banned the export of logs and wood chip, and reinforced this with signed agreements with both China and the Malaysian government for these countries to ban the import of illegal logs from Indonesia. This will take out many millions of cubic metres of illegal logs which have been exported from Indonesia in defiance of the temporary ban imposed in October last year.
Log availability
What is certain is that removing several million cubic metres of logs per year from the Far East export/import market will have a severe effect on the availability of logs to processors in China and Peninsular Malaysia, and to domestic plywood and sawmills and exporters in Indonesia.
Indeed it has been reported that because of log shortages for plywood mills within Indonesia, some 60% of their domestic plywood consumption has been taken by imports from China and Malaysia, with plywood processed from Indonesian logs.
The other main impact on the overall world tropical log market is the increasingly restricted total log supply. Tighter government controls in the Far East and in most of West Africa are seen to be much more effective than in the past. It is not clear whether buying countries have yet taken on board just how difficult it is becoming for processors to access sufficient logs to run production on full capacity.
An example is Cameroon. Bans on exports of logs of prime species forced exporters to build sawmills and now the newer, strict controls on harvest areas have led to much reduced harvest volumes to the extent that sawmills without their own concession are finding it virtually impossible to buy sufficient logs on the domestic market to keep their mills running.
Gabon also has held a tight rein on the supply of the main species okoume and ozigo, holding volumes only barely sufficient to meet demand. Congo Brazzaville is just beginning to re-enter the market and supplies here also are limited. Some traders mention thoughts of eventually accessing logs from Angola now the civil war is over, and even, in due time, from the former Zaire, now the Democratic Republic of Congo. Liberia, Equatorial Guinea and the Central African Republic are continuing to produce moderate supplies of major species but their capacity is limited and, sensibly, none has been tempted to sell on price, but followed the lead of the major producer countries.
Sawn lumber prices have once again remained firm and there were some distinct increases in price through June and July. The European holiday period has dampened demand but there is no oversupply and, with Netherlands back to work in a week or so and France following on, traders are expecting some resumed interest for the autumn.
Gabon mills report sales to China have increased by around 10% since April and that all current production is sold and being shipped immediately.
Cameroon mills for sale
Cameroon mills are finding it increasingly difficult to source sufficient logs to maintain viable production levels. It is reported that as many as 30 sawmills are for sale because of log shortages, while others are continuing to move into the more difficult markets for finished and semi-finished components.
The regional forecast is for some further modest price increases at the end of August as demand puts pressure on sawmills that are still struggling to source sufficient logs at affordable cost.
Changes from the April/May price levels include ayous FAS GMS up by e15/m3, abura FAS GMS up e20/m3, and bosse FAS GMS e31.39/m3 higher. Bubinga is unchanged as are doussie and padouk.
Douka FAS GMS is up by e18 and scants and fixed sizes are e30 higher. Iroko FAS GMS is higher by between e60-100, depending on specification, and Gabon sawn okoume and ozigo have managed small increases with FAS GMS up by e7, FAS fixed sizes up e23, Stanbet GMS up e11-16 and Stanbet fixed sizes e7-15 higher, all per m3 on FOB prices.
Major species are shadowing the recent meranti increases and steady improvement is forecast from end-August to mid-September.
In summary, West African log prices have continued firm through the second quarter and are expected to show some increases in the next two months as Far East meranti and other species move steadily upwards in response to higher logging costs and tighter controls on concessions. The Indonesian log ban should also lead to more competition for the reduced volumes available.
The recent small gains in West African sawn lumber prices are expected to hold and show further progress as log shortages tend to push up raw material costs.
